Newsquawk European Market Wrap - 2nd October 2026

• A dovish reaction was seen after the US jobs report missed on all key metrics.
• US payrolls rose 29k (exp. 90k), and saw 60k of downward revisions, while unemployment unexpectedly rose to 4.2%.
• Crude futures extended their downside, pressured by reports that France's stockpile release proposal to the US.

EQUITIES

• European bourses initially opened with broad gains but look set to finish Friday's trade mixed, with Germany's DAX 40 the outperformer while Italy's FTSE MIB lagged. Supporting the equity space was the downside in the energy complex, following reports of the EU discussing a proposal to release 50mln barrels each of diesel and crude oil.
• Sectors held their positive bias. Tech led, followed by Basic Resources and Telecoms. Banks continued to underperform, with Health Care and Media following in suit.
• Key stories included: IG Group -21.4%, saw Q3 total revenue falling 14% Y/Y; Volvo Cars -5.3%, removed its FY26 volume and cash flow outlook due to a challenging China market and slower-than-expected US recovery; Julius Baer +2.4%, announced a CHF 600mln share buyback programme; Solaria +3.5%, reportedly held talks with Alibaba to potentially supply power for a data centre in Spain; Glencore +3.0%, now saw FY26 Marketing Adj. EBIT to exceed USD 5bln.
• US cash equities opened entirely in the green, boosted by the downbeat jobs report, which has cut the probability of a Fed hike in October to 18% from 24%. In brief, headline jobs printed at 29K (exp. 90K), 2-month net revisions fell 60K while the unemployment rate ticked higher to 4.2% (exp. 4.1%). For single-stock news: Tesla +4.6%, Q3 total deliveries beat estimates; Memory names (Sandisk -3.2%), after Toshiba plans to double HDD capacity by FY27.

FX

• Snapshot: G10s broadly strengthened (ex-CAD) against the Dollar, as energy benchmarks eased off highs and in the aftermath of a poor NFP report.
• On that note, headline payrolls printed at 29k (exp. 90k), with 2-month net revisions at -60k. The unemployment rate also ticked up to 4.2% from 4.1%, alongside an increase in the participation rate to 61.8% from 61.6%. The weak headline payroll growth, rise in unemployment and negative revisions add to concerns around the labour market. However, the labour market has remained relatively robust, and Fed officials have largely characterised it as close to full employment. Policymakers will likely require more evidence of a downturn in the labour market, so focus, for now, will remain on the inflation mandate; US CPI is due October 14th. Money markets now assign just a 16% probability of an October hike, down from 24% on Thursday evening. DXY is set to end the London session at the midpoint of a 101.71 to 102.13 range.
• Elsewhere, AUD is the slight outperformer this morning; then haven currencies CHF and JPY build on earlier strength to complete the top three. CHF appears to be benefiting from an unwind of recent carry trade, given narrowing yield differentials. To the downside resides the Loonie, which posted losses amidst falling energy prices, following Reuters reports that France has proposed plans to release 50mln barrels of diesel from Europe and 50mln barrels of crude oil across IEA members.
• EUR held steady throughout the session, with French fiscal issues still at the forefront of minds. Focus earlier was on the EZ inflation report. Headline Y/Y printed at 3.8% (exp. 3.6%, prev. 3.2%), and Services also rose from the prior. Pertinently, Core HICP moved only a touch higher to 2.2% (prev. 2.1%), which will be welcomed by policymakers, since there is still little evidence of second-round effects. Nonetheless, woes of rising inflation remain – and this data will only further cement calls for another hike later this year.

FIXED INCOME

• Snapshot: Global fixed benchmarks started the European session on a firmer footing, and were then boosted further by a dovish NFP report. In brief, headline missed expectations, whilst unemployment rose from the prior. Policymakers will likely require another report or two to become concerned about a downturn in the labour market, so, for now, the inflation mandate remains key.
• The US2yr fell from 4.77% to 4.70% following the report, before then clambering back towards the 4.75% mark. Despite the paring, a bull steepening bias remained into the European close. USTs (ZN 26) held within a 104-16 to 105-08 range.
• Bunds (+123 ticks) and Gilts (+113 ticks) followed the dovish action seen across peers. A touted European diesel/crude stockpiles release helped Bunds early doors, and then took another leg higher following the NFP report. No move was seen across EGBs following the EZ HICP report, which saw the headline top expectations whilst the Core edged a little higher. There is still little sign of second-round effects, but rising inflation keeps a hike on the cards this year.
• UK DMO to hold a programmatic gilt tender of a conventional Gilt on the 7th of October, for up to GBP 1.5bln of a 2028 Gilt.

COMMODITIES

• Crude - WTI Nov and Brent Dec futures extended their downside following yesterday’s rally, initially pressured by reports that France proposed releasing 50mln bbls of diesel from Europe alongside 50mln bbls of crude across IEA members, conditional on the US refraining from a unilateral diesel export ban. Further downside was seen following the much weaker-than-expected US NFP report, with payrolls rising just 29k (exp. 90k), alongside 60k of downward revisions, while unemployment unexpectedly rose to 4.2%. Elsewhere, the IRGC warned it is ready to respond to any attack, whilst US-Iran mediator Pakistan said there should be no fees for crossing the Strait of Hormuz. WTI fell to a USD 88.06/bbl low from a USD 93.51/bbl high (vs yesterday’s USD 88.79-93.68/bbl range), while Brent fell to a USD 98.72/bbl low from a USD 102.85/bbl high (vs yesterday’s USD 96.55-103.96/bbl range).
• Natural Gas - Dutch TTF trimmed its earlier weakness and moved firmly higher as European energy-security concerns remained in focus despite discussions around coordinated stock releases. The EU rejected the prospect of a US diesel export ban, while Germany reiterated that it did not want to unsettle energy markets further. TTF rose to a EUR 73.89/MWh high from a EUR 71.05/MWh low, trading with modest intraday losses (-0.2%) at the time of writing.
• Precious Metals - Precious metals extended their upside following the weak US jobs report before paring most off the NFP move. Softer payrolls and earnings data weighed on yields and provided support alongside the earlier pullback in crude. Prices then waned as weekend geopolitical risk comes into focus, with any spike in oil likely to weigh on the yellow metal. Spot gold rose to a USD 4,228/oz high from a USD 4,134/oz low, while spot silver similarly advanced to a USD 62.08/oz high from a USD 60.22/oz low.
• Base Metals - Base metals firmed despite mainland China remaining absent for the week-long holiday, initially benefiting from the pullback in energy prices and subsequent improvement in the risk backdrop post-NFP. COMEX copper rose to a USD 6.61/lb high from a USD 6.52/lb low, while 3M LME copper traded within a USD 14,243.03-14,420.83/t range.
• The US White House is reportedly preparing an executive order, aiming to tackle record diesel prices, that could be announced as early as next week, according to Reuter's Renshaw. The executive order is to include measures to expand the use of tax-exempt red-dyed diesel and other tax changes aimed at lowering fuel costs. Details are still being worked out.
• Russia's oil refining volumes down 14% Y/Y in January-September, according to reported.
• Saudi Arabia is reportedly pumping close to 6mln bpd oil on East-West pipeline and has about 4.5mln bpd pipeline flow available for export, Bloomberg reported.
• OPEC+ oil production capacity assessment exercise is delayed because not all countries have submitted data, according to reported, citing sources; exercise expected to be completed by Mid-November.
• EU Spokesperson said "we fully reject a diesel ban"; adds that a ban would not be beneficial to anyone, but it would undermine our trust in the United States as a reliable partner. Any release is something that is organised by the IEA.
• German Government spokesperson said that "we continue to see the US as a reliable supplier of fuel"; "we do not want to unsettle markets further".
• France has reportedly proposed that EU countries release 50mln barrels of crude oil and 50mln barrels of diesel, Politico reported citing sources.
• Russia's Deputy PM Novak said the more important task is the restoration of plants and equipment, a lot of work is being done to strengthen the protection of oil refineries, may open diesel exports if there is overproduction, according to Russian press. Russian diesel market is balanced. As soon as the domestic market balances, will return to gasoline exports and cut off imports.
• French President Macron spoke with US President Trump about energy and fuel prices, the Elysee said.
• French President Macron stressed the need to collaborate to tackle rising fuel costs and ensure global supply of refined products. G7 countries have an interest in acting in coordination with no restrictions on exports. He also discussed these same matters with Canada's Carney. There is a need to work together to combat rising fuel prices and ensure global availability of refined products.
• France has reportedly proposed plans to release 50mln barrels of diesel from Europe and 50mln barrels of crude oil across IEA members, Reuters reported citing sources. Any agreement on stock releases should include the US commitment to avoid a unilateral diesel export ban.
• EU countries addressed the US demand to release diesel stocks and threat of US diesel export ban in meeting on Friday, Reuters reported citing sources suggest; US has requested that large European countries release 800k tons of diesel over 6 months. Will have further discussions this afternoon.
• Iranian Parliamentary Energy Commission spokesperson said gasoline is being produced sufficiently domestically.
• Ukrainian Agricultural Minister said that the area planted to winter wheat in 2027 could decline about 17%.
• European Commissioner Jorgensen said the EU is discussing with all IEA members, not only the US, when it is time to release diesel stocks.

EUROPEAN DATA

• European Core HICP (Sep YY) 2.2% (prev. 2.1%).
• European CPI Flash (Sep) 104.3 (Prev. 103.69).
• European HICP (Sep MM) 0.6% (Prev. 0.4%).
• European HICP Ex Food, Energy & Tobacco (Sep YY) 2.5% vs. Exp. 2.5% (Prev. 2.4%).
• European HICP (Sep YY) 3.8% vs. Exp. 3.6% (Prev. 3.2%); Services 3.2% (prev. 3%). Energy rose 18.8% (prev. 14.3%).
• French New Car Registrations (Sep YY) 11.6% (Prev. 7.4%).
• UK DMP 3M Output Price Expectations (Sep) 3.7% (Prev. 3.8%).
• UK DMP 1Y CPI Expectations (Sep) 3.3% (Prev. 3.1%).
• Italian Retail Sales (Aug YY) 0.5% (Prev. 0.8%).
• Italian Retail Sales (Aug MM) 0.3% vs. Exp. -0.1% (Prev. -0.4%).
• Spanish Unemployment Change (Sep) 23.587K vs. Exp. 17.6K (Prev. 44.419K).
• Spanish Tourist Arrivals (Aug YY) 9.2% (Prev. 4.6%).
• Norwegian Unemployed Persons (Sep) 61.3K (Prev. 61.9K).
• Norwegian Registered Jobless Rate (Sep) 2% vs. Exp. 2.1% (Prev. 2.1%).

NOTABLE HEADLINES

• White House NEC director said not disappointed in US jobs report; Government employment down, everything else up; policies are working. Warsh has shown he understands supply vs. demand shocks. GDP still hovering around 4%. Diesel:. On diesel, have been talking with Europe. Europe release would have massive impact. Hopeful to have news on that sometime soon.
• US White House NEC Director Hassett says the jobs report was about expected.
• Swiss President Parmelin is to step down from the government on December 31.
• Swedish Parliament Speaker has given Social Democratic leader Andersson the opportunity to try to form a government again.
• Moody's said France's ability to tackle key policy difficulties despite political fragmentation is a key factor for the resolution of the negative outlook.
• France's Finance Minister said all measures in the budget proposal are open to negotiation.

TRADE/TARIFFS

• US President Trump said Republic of Korea deal keeps getting better. Full Post:. * I am thrilled to announce the Republic of Korea Deal keeps getting BETTER! 8.4 Billion Dollars for an enhanced Oil Recovery Project. Producing more Oil and Gas means American Energy Dominance and Energy Security in the World for the Future! President DONALD J. TRUMP.

CENTRAL BANKS

• ECB’s Vujcic said bank capital levels not a competitive disadvantage for Europe but rules could be simplified.
• ECB's Rehn said that ECB forecasts are facing extremely high and widespread uncertainty; energy surge is nearer to the adverse scenario, Econostream reported. One uncertainty is that market sentiment toward AI could reverse suddenly. Higher long-term rates will slow economic growth and reduce the pass-through of energy shocks to prices and wages.
• BoE Decision Maker Panel (Sep): firms' year-ahead CPI inflation expectations were unchanged at 3.1%, three-year expectations held at 2.8%, expected wage growth remained at 3.4%. Year-ahead CPI inflation expectations: 3.1% (prev. 3.1%). Three-year-ahead CPI inflation expectations: 2.8% (prev. 2.8%). Year-ahead wage growth: 3.4% (prev. 3.4%). Year-ahead employment growth: 0.2% (prev. 0.1%). Year-ahead own-price inflation expectations: 3.7% (prev. 3.8%).

MIDDLE EAST

• Pakistani Foreign Minister said next week’s meeting will discuss political engagement with the Houthis rather than kinetic action. More than six countries are interested in joining the Makkah defence pact. New requests to join the Makkah defence pact cannot be considered until the pact is fully operational, which could take up to a year.
• Iran's IRGC said it is ready to respond to any threat or attack, warning its response would be more lethal than the previous one.
• Israeli PM Netanyahu reportedly aims to win the elections by bringing US President Trump into a new war against Iran, Al Alam reported citing sources.
• Pakistan Foreign Minister said that there should not be any fee or charges to cross the Strait of Hormuz.
• Iranian National Security Commission said that Iranian management of the Strait of Hormuz will be applied. Ships to Zionist or hostile regimes will not be able to pass through the Strait, others will have to get permission. Bill is queued for parliament.
• White House NEC Director Hassett said the Navy has opened Hormuz and crude coming through and more announcements next week on energy.

RUSSIA-UKRAINE

• Ukraine's President Zelensky said Ukraine hit the Samara and Volgograd oil refineries in Russia.
• Russia's Kremlin said Russia will continue operations to completely stop supply of weapons and fuel for the Ukrainian military via the Black Sea.
• Russia struck a vessel in the Black Sea and an industrial, production complex at port of Izmail in Ukraine’s Odesa region overnight, according to IFX citing the Russian Defence Ministry. Russia also hit a bridge across Dnieper river and an electrical substation in Kyiv overnight.

NORTH AMERICAN DATA

• US Average Hourly Earnings (Sep YY) 3% vs. Exp. 3.2% (Prev. 3.1%).
• US Participation Rate (Sep) 61.8% (Prev. 61.6%).
• US Unemployment Rate (Sep) 4.2% vs. Exp. 4.1% (Prev. 4.1%).
• US U-6 Unemployment Rate (Sep) 7.6% (Prev. 7.7%).
• US Nonfarm Payrolls Private (Sep) 46K vs. Exp. 85K (Prev. 89K).
• US Non Farm Payrolls (Sep) 29K vs. Exp. 90K (Prev. 133K); 2-month net revisions: -60k (prev. +55k for June and July); birth death: -190K.
• US Average Hourly Earnings (Sep MM) 0.1% vs. Exp. 0.3% (Prev. 0.3%).
• US Government Payrolls (Sep) -17.0K (Prev. 44.0K).
• US Manufacturing Payrolls (Sep) 9K vs. Exp. 10K (Prev. 15K).
• US Average Weekly Hours (Sep) 34.4 vs. Exp. 34.3 (Prev. 34.4).